The Price Act and the price of fresh pork

Published April 17, 2021, 6:00 AM

by Atty. Vic Dimagiba

 In 1992, the late President Corazon C. Aquino signed into law Republic Act No. 7581 (The Price Act). It provides protection to consumers by stabilizing the prices of basic necessities and prime commodities and by prescribing measures against undue price increases during an emergency situation and similar occasions. The Price Act was amended  by Republic Act No. 10623 in 2013, signed into law by another Aquino, President Benigno III.

Under the Price Act, basic necessities are goods vital to the need of the consumers for sustenance and existence, such as rice, corn, root crops, fresh meat products, vegetables,essential medicines, coffee, candles, bread, noodles, bottled water, LPG and kerosene.   Prime commodities are not basic necessities but are essential to consumers, such as manufactured and processed goods, flour and construction materials.

Consumers are informed of suggested retailprice (SRP),  price freeze and mandated price ceilings.

During normal periods, the Price Act prescribes a mechanism to ensure reasonable prices of basic necessities and prime commodities as while enabling fair return to the investments of business.  Any of the implementing agencies may issue SRPs for anyof the basic necessities and prime commodities under his jurisdiction for the information and guidance of the entire supply or value chains viz. the producers, manufacturers, traders, dealers, sellers, retailers and consumers.

SRPs consider the costs of raw materials, peso exchange rate, labor and wages, utilities, transportation and distribution, administrative overheads and margin of thevalue chain. One method widely use in determining SRPis the Fishbone Analysis.

On occasions of calamities and emergencies, prices are automatically frozen at their prevailing prices at the time of the declaration of the calamity and emergencies for all basic necessities only, or a mandated price ceiling is set for both basic necessities and prime commodities.

The price freeze overrides all existing SRPs for any basic necessity. The price freeze must be at all times lower than the SRP. The most recent price freeze was authorized in Presidential Proclamation No 1051 in November 2020 due to the consecutive typhoons that hit Luzon Island. 

A third price tool that is more commonly understood as price control is the Mandated Price Ceiling that is used for basic necessities as well as prime commodities.This remedy is used when manipulation is widespread and prices of goods have risen to unreasonable levels.

Price ceiling was utilized in the prices of pork products by virtue of Executive Order No 12 in February 2021 and fixed at Php 270 per kilo for Kasim, Php 300 for liempo and Php 160 for kilo of whole chicken in Metro Manila markets. There were allegations that traders committed price manipulations amidst the prevalence of the African swine flu that affected the local hog industry. Consumers are still waiting for the release of the results of the investigationon alleged price manipulation.

Let us review the monitored  price ceiling report for pork and chicken using the price data of the implementing agency:

                                  

Based on the above data, I think that it is fair to say that setting the price ceiling of pork products partly achieved  the desired objective of lowering the retail prices of meat products, albeit still higher than the price ceilingitself.We can see reduction of P50.00 per kilo of pork products while chicken prices hardlymoved and remained stable.

It is my opinion that the continuing existence of calamity caused by the African swine flu merits the extension of the implementation of either a price freeze or price ceiling of meat products, including imported pork products. I do not agree on an SRP for imported pork products.

          Atty.  Vic Dimagiba, AB, LLB, LLM

          President, LabanKonsyumer Inc.

[email protected]

 
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